Modern Equity

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Modern Equity

“Equity

administers individual justice and this is reflected in its standards based

approach to adjudication whereas common law administers universal justice and

this is reflected in its reliance on rules”.

Evaluate this

statement in relation to the nature and purpose of modern Equity:

Martin

considers the debate concerning the nature and understanding of equitable

rights and the interests of the beneficiary; this debate concerns whether the

rights and duties under equity are in personam or in rem or

possibly in the modern day fused and there is no distinction between the two

categories. This debate has arisen from the encroachment of equity on property

rights and law; which affords the beneficiary with equitable rights of

ownership.

This debate, Mockler,

argues due to Austin’s distinctions that rights either have to be in rem or in personam but not both. Mockler defines an in rem right as a

right enforceable against the world with respect to a particular thing; in other words these rights are enforceable against the whole world that is

property, which is also known as equity’s darling the bona fide purchaser

without notice. However the debate as Mockler

and Martin

argue has been caused by the beneficiary under a trust muddying the waters in

the distinction between rights in personam and in rem.

Martin

further presents the problem that faces investigation into the nature of

equitable rights and determining whether equity is validly doing what is just,

i.e. dealing with the deficiencies and injustices at common law. However a

majority of modern equity is concerned with property rights and interests

within property, i.e. matrimonial home trust. The trust is a machination for the

courts to use in order to ensure that individuals who are being treated

unfairly at the level of common law, in relation to property, are given rights

within this property.

In order to

understand the following discussion the purpose of equity has to be defined:

Equity: ‘modification of common law: the system of

jurisprudence that supplements common and statutory law, when those bodies of

law are inadequate in the attainment of justice; justice tempered by

ethics: justice applied in conformity with the law, but influenced at the

same time by principles of ethics and fair play; [and] fair

claim: a claim that is judged to be just and fair.’

An Equitable Trust: ‘position of obligation: the position

of somebody who is expected by others to behave responsibly or honourably; something

in which confidence is placed: somebody that people place confidence or

faith in; law holding of another’s property: the legal holding and

managing of money or property belonging to somebody else, for example, that of

a minor; arrangement to manage another’s property; [and] a

legal arrangement by which one person (trustee) holds and manages money or

property belonging to somebody else’.

In Personam Rights:law directed

at somebody: made about or directed at a person rather than at property’.

In Rem Rights: ‘law directed at property: made about

or directed at property rather than a person’.

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The above dictionary definitions

introduce some very important notions that deal with justice, but not the

justice of contracts or organizations but the individual. In addition the

equitable trust, which is either set up by the property owner to safeguard the

future of an individual or by the court to remedy injustice to the individual,

due to deficiencies at the common law. Therefore the notions of responsibility

and obligation of one individual(s) for another is important, e.g. fiduciary

relationship, by the court in the interest of justice; hence resulting in the

importance of personal conscience

History of Equity and

Proprietary Interests:

The most important

notion that equity created was it dealt in personam at the discretion of

the Chancellor, i.e. in the interests of justice. This became historically

important in protecting the Lord’s benefit in his vassal’s (feoffee) land. As

Martin

argues equity works in respect to maxims is that equity’s rights are in personam,

i.e. historically equity acted at the discretion of the Chancellor. The origins

of the use of equitable rights, by the Chancellor, were run by the liege’s

(feoffees) for the benefit of the liege lord (cestui que use); even

though legal ownership was in the hands of the liege. As Maitland argues:

‘Equity did

not say that the cestui que trust was the owner of the land, but added

that he was bound to hold the land for the benefit of the cestui que trust’.

Hence Martin and Maitland

illustrate that equity was originally used to protect the natural order and

hierarchy in land ownership, i.e. the interests of the Lord and King were

protected, but the ownership was vested in their vassals. However as the

notions of land ownership and governance changed over the centuries equity was

no longer used to protect the King’s interests; instead it was used to protect

those persons who could not hold an interest in land. This discretion of the

Chancellor has today developed into a body of law whereby in personam rights

have been used to protect rights to do with ownership of property and land.

Martin then goes further to distinguish that these property rights are not in

rem, because the legal owner is the person that holds the in rem rights; however the legal owner cannot override the interests of the equitable

owner. In other words the trustee must protect the rights of the owner of

equity and the theory that equity acts in personam is still arguably

valid:

The

beneficiary asserts his rights by an action against the trustees to enforce

their duties; the old theory that equity acts in personam is wholly

acceptable.

The historical notion has a strict

separation of equitable rights and remedies and those at the common law level;

however there has been a body of debate from 1875 when the two courts were

amalgamated whether this distinction of in rem rights for legal

ownership and in personam rights for equitable ownership. The following

section will discuss the fusion of equity and legal rights; however as one can

already surmise the notion of property and property rights dominates the notion

of equity.

A Critical Application of

Equitable Interests:

In response to

the effect of equity and rights there are three views, especially with the

combining of the two courts into a single court with the 1875 High Court

Judicature Act, the traditional view was illustrated by Ashburner:

The two

streams of jurisdiction though they run in the same channel; run side by side

and do not mingle their waters’.

There are those that have argued

that equity now prevails over the common law system, especially in respect to

the fusion of the equity and common law courts into one, which was a concern

reported by Sir Jessel:

There are

not two estates as there were formerly, one estate in common law by reason of

the payment of rent from year to year and an estate in equity under the

agreement. There is only one court, and equity rules prevail in it.’

On the other hand those have argued

that this mixing of equity and common law has caused confusion and possibly

eradicated the need for a separation of equitable remedies from the common law,

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because all can be protected at the common law level, i.e. the law has

naturally evolved to protect equitable rights, which are no longer

discretionary but dictated by common law precedent but equity does not prevail,

because legal rights are a very important notion and Ashburner’s metaphor is

incorrect, as well as the notion that there is only a court ruled by equity and in personam rights and not common law and in rem rights. This

view was presented by Lord Diplock in United Scientific Holdings Ltd v

Burnley Borough Council;

he argued that Ashburner’s explanation of the distinction between rights in

personam and in rem is outdated and conservative. Instead Diplock

argues that rights in personam and in rem, like the courts of

equity and common law, are fused. Therefore if the modern view is the correct

view then there is no separation of rights in rem and rights in

personam in relation to equitable rights and remedies versus legal rights

and remedies; however the most important distinction between the equity and the

legal is held within the Law of Property Act 1925; whereby the difference

between equitable and legal ownership is defined. However this falls into the

trap that equity is overly concerned with property and is it sufficiently

acting to ensure that the duties of the legal owner’s conscience coincide with

the interests of justice, i.e. the reason why equity was created:

‘I do not,

for my part, think it matters one jot whether the duty is expressed as a common

law duty or as a duty in equity. The result is the same.’

In other words the interests of

justice are satisfied, which is the central reason that equity was formulated;

however the current debate whether there is a distinction between equitable

rights and remedies and those provided at the common law indicate that the

amalgamation of the legal and equitable systems have not yet filled the

holes of deficiency within the common law. As the Medforth v Blake case indicates that the two bodies of law are coming together, which is not

a dreadful notion but an indication that English Law is adapting to the modern

age, where the old notions of property ownership is no longer applicable.

However this development is still necessary to continue, because the equitable

and legal rights are still significantly important until such a time that there

are no longer deficiencies in the common law system:

‘What can be

said is that a century of fused jurisdiction has seen the systems working more

closely together; each changing and developing and improving from contact with

the other; and willing to accept new ideas and developments, regardless of

their origin. They are coming closer together. But they are not yet fused.’

The Family Home – A Modern

Problem in Equity:

The following

case study will attempt to explain the importance of equity dealing with

property law, especially in respect to those who do not hold property rights,

socially and traditionally. Hence the reason for choosing women, because

traditionally women never held property, in fact they were seen as property, at

the worst, and akin to children, at the best, and equity became involved to

ensure that women were protected under equity. In the modern era, women can own

property and are seen as equal to men; however socially women still do not own

property at the same scale as men and traditionally are the home and child

carer and the financial contributions to the mortgage are usually be the

husband, therefore equitable protection is very important in the case of

marital break up. It must be noted that this notion can protect the husband, if

in the weaker position; also there is possible indications that it is viable

for common-law couples and possibly in the future the modern notion of same-sex

couples.

This has become

a very modern problem, because the nature of the family and the home is

changing; however women traditionally are the non-legal owners of property and

the titles are vested in the husband. Judges in the late 60s and 70s recognized

this problem, as well as the growing number of co-habiting couples and had not

entered into the institution of marriage and aimed to protect the rights of

women, which the common law was neglecting when families split up because these

women did not hold property rights.

Lord Denning developed this to ensure that non-financial contributions to the

home were recognized and the matrimonial constructive trust was created.

However the House of Lords rejected this approach as encroaching on property

and in rem rights, but did allow for a trust to be created if

substantial contributions were submitted to the matrimonial home, e.g. mortgage

payments and home improvements.

However there was an outcry and protection was afforded to women statutorily;

yet there are still problems that equity is still trying to deal with, such as

unmarried couples and same-sex couples and as Sir Scott Medforth states:

‘I do not,

for my part, think it matters one jot whether the duty is expressed as a common

law duty or as a duty in equity. The result is the same.’

Therefore it is justice that equity

is aiming to create and its flexibility is important, if it shies away because

of the property rights versus equitable rights debate then it is not filling

the voids and deficiencies of the common law.

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Conclusion:

The above

exploration has considered the notions of in personam and in rem rights

and the involvement of equity in property ownership; it must now be discussed

whether equity’s involvement in property ownership is valid. As already

mentioned a lot of English law is based on the notion of property ownership;

however the present legal system has had centuries of deficiencies in

protecting ownership rights because certain categories where unable to own

property, such as women, and only recently in the history of English law has

the notion of property ownership changed, i.e. all capable persons may own

property, including women and children; however with regard to real property

children cannot be legal owners but can be beneficial owners, hence equity’s

role. Equity has a very important role because it is flexible, unlike

common-law, due to its historically discretionary basis and creativity.

Therefore it is able to fill the voids within the English law in a more

efficient manner than the common-law, which is based on years of precedent;

whereby if equity never became involved in the law of property and proprietary

interest then it would not be satisfying the needs of justice.

Bibliography:

  • W. Ashburner (1933) Principles of Equity 2nd Edition, London, Butterworths
  • Cheshire & Burn (2000) The Modern Law of Real

    Property 16th Edition London, Butterworths

  • R. Edwards & N. Stockwell (2002) Trusts and Equity,

    Harlow England, Longman

  • J. Eekelaar (1987) A Woman’s Place – A Conflict

    between Law and Social Values, Conv93

  • P. Ferguson (1993) Constructive Trusts – a Note of

    Caution, 109 LQR 530

  • Goff & Jones (1998) The Law of Restitution 5th Edition, London, Sweet & Maxwell
  • Hayton & Marshall (1996) Commentary and Cases on

    the Law of Trusts and Equitable Remedies 10th Edition, London,

    Sweet & Maxwell

  • Heydon, Gummow & Austin (1993) Cases and Materials

    on Equity & Trusts 4th Edition, London, Butterworths

  • Holdsworth (1974) History of English Law Vol. 17,

    London, Sweet & Maxwell

  • Maitland (1936) Maitland’s Equity 2nd Edition, Cambridge, Cambridge University Press
  • J. Martin (2001) Hanbury and Martin: Modern Equity 16th Edition, London, Sweet & Maxwell
  • Megarry & Wade (2000) The Law of Real Property 6th Edition, London, Sweet & Maxwell
  • Meagher, Gummow & Lehane (1992) Equity: Doctrines

    & Remedies 3rd Edition, London, Butterworths

  • E. J. Mockler (1962) Commentary on Gladys Evans v

    Minister of National Revenue, 40 CBR 265-284 [The Case that this piece is

    referring to can found at: [1960] CTC 69]

  • Oakley (1997) Constructive Trusts 3rd Edition, London, Sweet & Maxwell
  • Parker & Mellows (1998) The Modern Law of Trusts 7th Edition, London, Sweet & Maxwell
  • Pettit (1997) Equity and the Law of Trusts 8th Edition, Croyden, Butterworths Tolley
  • R. Probert (2001) Trusts and the Modern Woman –

    establishing an interest in the family home, CFam 13.3 275

  • Snell (2000) Principles of Equity 30th Edition, London, Sweet & Maxwell
  • D.W.M Waters (1967) The Nature of Trust Beneficiary’s

    Interest, 45 CBR 219-283

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